Strategic Outsourcing

Introduction

Outsourcing has become a highly popular business strategy in
the current decade. Businesses take to outsourcing for
different reasons like cost savings, access to latest
technologies and specialists and flexibility. While
outsourcing has helped many companies to reach the top, it
is not advisable to go for it without studying the scenario.
Businesses need to think over their requirements and plan
properly before they approach vendors for outsourcing
agreement.

Have a Strategy

As we saw earlier, a company needs to study its requirements
and problem areas before it decides to outsource. This is
not all. In fact, the best way is to develop a strategy for
outsourcing. This means that the company has to study its
long term goals and identify which parts of the work to
outsource, the reasons, how long and where to outsource. It
also has to study the costs and determine if it is more
beneficial in the long term to outsource or to do the work
in-house. There are also aspects like the political and
economic stability of the outsourcing destination that need
to be taken into consideration.
Given below are some of the key aspects of the outsourcing
decision making process.

Choosing the Right Destination

The right kind of destination should have a stable political
and economic environment. The destination should provide
ample choice from among a good number of quality certified
software or other relevant outsourcing service providers.
Availability of skilled workforce, good communications and
internet infrastructure and a compatible time zone are other
important parameters. And last but not the least, all this
helps only when the labor costs are lower than the buyer’s
country.

Choosing the Vendor

It is desirable to choose a vendor who has already built a
good reputation. The buyer needs to also look into how well
equipped the vendor is to recruit and train the required
manpower. The vendor has to be quality certified and also
should have good infrastructure and scalability. Also
important is to study for whom and for how many the vendor
has been working. Multiple technological skills are another
advantage.

The Contract

The outsourcing contract is a very crucial aspect of the
outsourcing process. It is therefore important to have a
full-fledged contract with all the necessary information
clearly spelt out. It should also have a service level
agreement (SLA). It helps a great deal to have the terms
flexible and expandable. The contract should also include
licenses and other warranties duly signed.

Communications

The company’s communications with the vendor do not end with
signing the contract. It is crucial to have ongoing
communications between the buyer and vendor. Therefore the
parties have to establish a channel for communication and
convey the specific needs, expectations and problems as and
when they arise.

Measure Your ROI

The success rate of the outsourcing arrangement can be known
only when the buyer and the vendor have a proper system for
measuring their return on investment (ROI). Taking these
steps can take an organization a long way in its pursuit of
outsourcing success. Measuring the ROI • Measuring the ROI
(return on investment) is the most important step in
deciding the actual success or failure of the outsourcing
project. Hence regular measurement of ROI is very important.

By following these simple steps on how to outsource
successfully an organization is sure to reap the maximum
benefits.

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